Five contracts you need to protect your business
If you want to set your small business up for success, you need to do more than just be an expert in your field.
You need to protect both yourself and your business by putting the right contracts in place.
And while some entrepreneurs believe they can do this on their own, a good corporate lawyer is one of the wisest investments your small business can make.
That’s because a good corporate lawyer is well-versed in the law. He or she can properly draft essential contracts that:
- clearly set out the parties’ expectations and requirements; and
- protect your business from negative, oftentimes unforeseen, impacts.
Below are five key contracts every small business should have in place.
For small businesses that provide services, this contract sets out the names and contact information of the parties involved, and the scope of professional services your business provides. It should be drafted in such a way as to give you flexibility with respect to the completion of services. To avoid misunderstandings and/or undue liability, you will also want to set out your terms and conditions, responsibilities and liabilities, and any situations that could give rise to additional fees.
For ventures that sell products, a sales contract sets out price, payment terms, warranties, disclaimers, conditions, and liability limitations.
Employment offer letters
Again, to avoid misunderstandings and liability, small businesses should require employees to sign employment offer letters. These letters set out the particulars of any given job offer, such as duties, salary, benefits, and confidentiality obligations.
Employee/independent contractor agreements
These contracts define an employee’s salary, working hours, holidays, and other such benefits. Your lawyer may also include a confidentiality clause to protect your company’s intellectual property. Be sure to accompany these contracts with a policy manual that details your company’s dress code, internet and phone use policies, disciplinary procedures, and so forth.
Independent contractor agreements
In today’s gig economy, many small businesses rely on independent contractors to get work done. An independent contractor agreement defines the work arrangement between the parties and should include the scope of the project, expectations with respect to working hours and communication, and desired outcomes.
Your vendors likely use their own form of contract. Before you sign, have your lawyer read the contract carefully and advise you on any provisions that may be of concern, such as early termination or interest fees.
It isn’t uncommon for entrepreneurs to share confidential information about their business with other parties, such as when you wish to hire a vendor for marketing work or pique an investor’s interest. Before you do so, you should have a confidentiality agreement in place. This requires the other party to hold any information disclosed in strict confidence and to use same only for a particular purpose. Your lawyer will set out the other party’s obligations, how long such obligation is to last, exclusions thereto, and your right to seek injunctive relief to stop the disclosure of information.
The above agreements are by no means a complete list of the contracts you need to protect your small business. To learn more, contact a corporate lawyer today.